The UK government’s housing agency and two local authority pensions schemes have committed capital to a newly launched M&G Investments shared ownership UK housing fund.
The M&G Shared Ownership Fund has been launched with an initial £215m (€246.6m) of investment from Cambridgeshire and Northamptonshire local government pension schemes, the UK government’s Homes England and two M&G client funds, alongside the Hyde Group housing association.
Homes England said it made a £10m commitment to the fund. The contributions of the other parties were undisclosed.
M&G Investments said it has also formed a partnership with Hyde which will deliver £500m of new sustainably designed affordable homes and “provide investors with index-linked rental income and house price exposure”.
The partnership will enable M&G Investments to buy existing stock and fund much of Hyde’s development pipeline.
M&G Investments said the first stage of the partnership has been marked by the fund’s £61m acquisition of 422 homes from Hyde in London and Kent.
Alex Greaves, head of residential investment at M&G Investments, said: “Well managed shared ownership is a brilliant first step onto the housing ladder for aspirational homeowners and as trusted investors with access to deep pools of client capital, we are fully committed to innovating and improving standards – adding scale and efficiency to the fund.
“Working with an organisation of Hyde’s calibre which shares our social and environmental values and aspirations, is a perfect blueprint for how the private and public sectors can combine forces to make a positive impact on this underserved sector.”
Paul Tysoe, investment manager for both the Northamptonshire and Cambridgeshire local government pension funds, said: “For income-seeking investors such as pension funds, shared ownership offers another means of diversification due to the sector’s low correlation with other asset classes and long-term inflation-linked income with exposure to house price growth.
“Having invested in M&G’s UK residential property fund since 2017, we have the comfort of its track record, expertise and ESG credentials and we welcome the positive social impact that this new fund represents.”
Peter Denton, CEO of the Hyde Group, said: “Hyde, like all housing associations, faces multiple funding challenges to ensure our homes are safe, decent and sustainable. It is imperative that we find new sources of funding and partners that are committed to environmental, social and governance outcomes, to ensure that we can continue to build the new homes that are so desperately needed while also investing in our existing properties.
“The shortage of affordable homes is still real, significant and urgent and we owe it to our future customers to continue to build new homes, despite competing demands on our money.”
Gordon More, interim CEO at Homes England, said: “Securing new institutional capital to increase the delivery of new affordable homes is a priority for Homes England.
“Today’s investment is a signal to both domestic and international institutional capital that the government supports sustainable long-term investment in affordable housing to meet the needs of communities across the country.”
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